The Impact of Stagnating Casino Revenues on State and Local Tax Receipts

34 Pages Posted: 29 Feb 2016

See all articles by Thomas E. Lambert

Thomas E. Lambert

University of Louisville

Arun K. Srinivasan

Indiana University Southeast - School of Business

Date Written: February 26, 2016

Abstract

In the aftermath of the Great Recession of 2007-2009, the popular press has noted a rebound in casino revenues in some states, and some expect casino revenues to grow and increase again along with any economic recovery. However, before the recent recession, there were trends indicating stagnation or a peak of casino revenues in most states, and as the last recession has indicated, casino revenues were not “recession-proof” as most had thought previously. In fact, casino revenues in most states saw big declines. In this paper, we show that the casino revenues have stagnated or declined partially due to a saturation point being reached with regard to casino gaming in many areas of the United States. The growth rate of casino revenues as well as the tax receipts for the state governments from casinos follows an ‘S’ curve which is similar to a product life cycle curve. The introduction of more gambling venues as well as putting in slot machines at race tracks may give a temporary boost to state gambling tax receipts, but longer run trends indicate that the years of casinos showing large gains in revenues may be over unless casino operations continue to re-invent themselves.

Keywords: Casinos, Tax revenue, Life Cycle Theory, Regional Development

JEL Classification: H7, J4, R1

Suggested Citation

Lambert, Thomas E. and Srinivasan, Arun K., The Impact of Stagnating Casino Revenues on State and Local Tax Receipts (February 26, 2016). Available at SSRN: https://ssrn.com/abstract=2738747 or http://dx.doi.org/10.2139/ssrn.2738747

Thomas E. Lambert (Contact Author)

University of Louisville ( email )

Economics Dept.
Louisville, KY 40292

Arun K. Srinivasan

Indiana University Southeast - School of Business ( email )

4201 Grant Line Road
New Albany, IN 47150
United States
812-941-2067 (Phone)

HOME PAGE: http://homepages.ius.edu/asriniva

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